Axis MF Launches Quant Fund NFO – Should you Subscribe?
Axis Mutual Funds has launched a new fund offer, Axis Quant Fund NFO that would open for subscription on 11th June, 2021. This is an open-ended mutual fund scheme that follows the quantitative model. Quantitative model in simple terms is nothing but selecting the stocks based on fundamental approach + rule-based criteria. The quantitative investing model aims to reduce fund Manager bias in the mutual fund selection process. Should you invest in the Axis Quant Fund NFO? How do quant based mutual funds performed in the recent past?
Also Read: BOI Axa Blue Chip Fund NFO opens on 8th June, 2021 – Should you opt?
Axis Quant Fund NFO Details
Axis Quant Fund NFO would open for subscription on Friday, 11th June, 2021 and closes on Monday, 25th June, 2021. This is an open-ended mutual fund scheme. Here are the NFO issue details.
| Scheme Opens | 11-Jun-21 |
| Scheme Closes | 25-Jun-21 |
| Scheme reopens for continuous purchase/sale | After 5 working days from closure |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1,000 for 6 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Redemption beyond 10% – < 1 year – 1% |
| Risk | Very High Risk |
| Max expense Ratio (TER) | 2.25% |
| Benchmark | S&P BSE 200 TRI |
What is the investment objective of Axis Quant Fund NFO?
To generate long-term capital appreciation by investing primarily in equity and equity related instruments selected based on a quantitative model.
However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.
What is Axis Quantitative Model Theme?
You can skip this section if you are already aware of the model theme.
This fund would invest based on Q-GARP approach. The section of portfolio would be based on Quality Stocks with a Good but at A Reasonable Price (QGARP).
This fund would invest based on fundamental factors as well as technical factors.
1) Fundamental Factors:
The model will look at various fundamental factors like:
Return on Equity
Sales growth
Cash flow
Debt to equity ratio
Earnings growth
Price to book
Price to earnings
Dividend yield
Earnings yield
2) Technical Factors:
It considers various technical factors like:
Liquidity
Stock price momentum
Volatility
Historical performance
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Equity & Equity related instruments of selected companies based on a quantitative model | 80% | 100% | High |
| Other Equity and Equity related instruments | 0% | 20% | High |
| Debt and Money Market instruments | 0% | 20% | Low to Medium |
| Units issued by REITs and InvITs | 0% | 10% | Medium to High |
Why to invest in the Axis Quant Fund NFO?
Here are a few reasons to invest in this fund.
1) This fund invests based on the quantitative model theme which considers both fundamental and rule-based criteria. This strategy would help investors to diversify their portfolio of mutual funds through novel approach of investing.
2) This fund invests in unique proposition of a fundamentally driven quantitative approach that has diversified portfolio across sectors and across market caps which aims to outperform across market cycles.
Major risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) Axis quant fund investment strategies are rule-based factors which would be based on medium to long term. Such rule-based approach may not always work.
2) This fund invests up to 20% in debt instruments which are turned to be high risk these days.
3) This fund invests up to 10% in REITs and InvITs which are high risk.
How is the past performance of Quant theme based mutual funds?
Here is the performance of mutual funds which are investing based on this quantitative model theme. Returns more than 1 year are annualised.
| Fund Name | 1 Year | 5 Years | 10 Years |
|---|---|---|---|
| Nippon India Quant Fund | 53.1% | 13.6% | 10.5% |
| DSP Quant Fund | 53.2% | – | – |
| Tata Quant Fund | 35.8% | – | – |
Should you invest in the Axis Quant Fund NFO?
Axis Quant Fund invests based on a quantitative model theme, i.e., fundamental factors with rule based. There was flood of new funds with this concept in the recent 1 year. There is only 1 fund which is existing in the long term of 10 years and this fund gave 10.5% annualized returns. These quant theme-based funds can provide moderate returns in the medium to long term. High risk investors can invest in such funds considering this aspect. Alternatively, one can look for some of the thematic mutual funds which has outperformed in the recent past.
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